“Last year, the Japanese economy shrank by more than 5 per cent. And the high hopes that surrounded the reformist government of Yukio Hatoyama, the prime minister who was elected last summer, have quickly dissipated. Mr Hatoyama’s approval ratings are sinking and the Japanese business and civil service establishment seem eager to dismiss him as an ineffectual clown.

“How Japan reacts to this new sense of weakness – exaggerated though it may be – will matter to the whole world. The country’s size and strategic importance make it critical to America’s Pacific strategy and to China’s geopolitical calculations.

“As it adapts to Japan’s new circumstances the Hatoyama government has, almost unwittingly, initiated a debate about the value of Japan’s alliance with the US. Some western observers in Tokyo muse that perhaps Japan is once again following its historic policy of adapting to shifts in global politics by aligning itself with great powers. Before the first world war the country had a special relationship with Britain. In the inter-war period Japan allied itself with Germany. Since 1945, it has stuck closely to America. Perhaps the ground is being prepared for a new ‘special relationship’ with China?”

The signs of Japan’s shifting allegiances are showing up in a variety of ways. A statement from Japan’s foreign minister revealed his perspective that, “this will be the age of Asia.” Similarly, Japan’s prime minister has criticized America’s “unrestrained market fundamentalism.”

Tellingly, the verbal distancing has crossed over into the military realm as well. The Democratic Party of Japan has expressed a desire to see the US move its Okinawa military base. Given the US-Japanese security treaty, and the roughly 50,000 Americans in place there, it’s no small matter to mention offhand.

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About Rocky Vega:

Rocky Vega is publisher of Agora Financial International, where he advances the growth of Agora Financial publishing enterprises outside of the US. Previously, he was publisher of The Daily Reckoning, and founding publisher of both UrbanTurf and RFID Update — which he ran from Brazil, Chile, and Puerto Rico — as well as associate publisher of FierceFinance. Rocky has an honors MS from the Stockholm School of Economics and an honors BA from Harvard University, where he served on the board of directors for Let?s Go Publications, Harvard Student Agencies, and The Harvard Advocate.